“We’re not recommending any disgorgement because under the
law the losses avoided had to have been for personal gain,”
Jonathan Kwan, a lawyer representing the government said after
appearing before Hong Kong’s Market Misconduct Tribunal today.

A decision on whether to sanction Stairs by banning him
from dealing in securities or corporate directorship in the city
is entirely up to the tribunal, Kwan said.

The three-member Hong Kong tribunal, led by High Court
Judge Michael Lunn, found in a ruling dated April 26 that Stairs
received non-public information in June 2009 about a share
placement from the Chinese vegetable producer’s Chairman Kwok Ho
and Chief Financial Officer Andy Chan on a phone call and sold
down his Chaoda holdings before the placement was announced. The
tribunal said today it will rule on any sanctions for Stairs in
due course.

Vincent Loporchio, a Boston-based spokesman for Fidelity,
said before today’s hearing that the company disagrees with the
Hong Kong tribunal’s conclusions regarding Stairs.

“He did not knowingly trade on non-public price sensitive
information,” Loporchio said in an e-mailed statement.
“Fidelity conducted a thorough internal review of this matter
consistent with its strong protocols.”

No Personal Profit

Stairs, who remains an employee and is no longer managing
assets on behalf of funds or clients, also didn’t trade
personally in Chaoda or profit personally in any way, Loporchio
said. The approximate loss avoided on behalf of shareholders was
only 0.017 percent of the fund’s assets under management, he
said.

Stairs netted HK$1.98 million for his funds by selling
Chaoda shares ahead of the share placement announcement,
according to a government notice.

“It was not a coincidence that, on the very day on which
he had received material price sensitive information from Kwok
Ho and Andy Chan, George Stairs placed an order to sell a parcel
of those shares,” the tribunal wrote in April.

BlackRock Inc. (BLK) employees who also participated in
conference calls with Kwok and Chan in June 2009 reported the
information to their compliance department “immediately” and
were restricted from trading, the tribunal heard.

Ho and Chan didn’t break insider trading laws when they
“deliberately and knowingly” divulged Chaoda’s plans to issue
shares on investor calls, according to the tribunal’s ruling.

“Whatever were their purposes for disclosing the
information to George Stairs, we are sure that it did not
include the purpose that he use the information to deal in
Chaoda shares,” the tribunal said.